Original text here from Patrice Bernard (LinkedIn)
The concept of "embedded insurance" is currently a popular topic, but its precise definition still appears unclear, as noted, for example, by the CEO of the American InsurTech company Mylo. Here's why I don't share his viewpoint (and my reasoning applies to banking as well).
According to David Embry, the idea of seamlessly integrating insurance coverage into a customer journey through one-click subscriptions is perfectly suited for simple products and straightforward situations, such as purchasing an electronic gadget, planning a trip, or adopting a pet (incidentally, all areas where this concept has existed for a long time). However, it would be entirely unsuitable for more complex cases like death, housing, automotive, business, and other professional activities.
In a rather conventional reflex, where he insists on preserving the agent's role in the in-depth analysis of the customer's needs, he claims that the concept of embedded insurance boils down to providing smooth and transparent access to assembling all the necessary solutions to offer an optimal response to each customer (not solely based on the lowest price). This approach is then directed towards intermediaries who possess the required expertise to deliver it.
Such a maneuver, frequently observed among traditional players, is undoubtedly very convenient to avoid challenging the historical practices of the industry. It focuses on optimizing efficiency efforts without any disruptive changes. Unfortunately, it overlooks the true essence of the initial concept, thereby missing out on its opportunities and the likely radical transformation it will bring about in the near future.
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The first mistake of the suggested approach, and the most significant one, is losing sight of the real objective: the ability to provide protection within the context of an action or event, independent of insurance. It takes advantage of the opportunity to precisely define the need, raise awareness about the importance of coverage, and simplify the contracting process. The best time for subscription is not a meeting with a specialist but the emergence of a risk.
In the example mentioned by D. Embry, a business owner who starts from scratch in this regard and seeks guidance from an agent to explore all available options may not require these conveniences. But won't they be more receptive when ordering new equipment or during a crucial business transaction, each time facing the risk of forgetting to consult their current insurer? And what about small businesses that, due to insufficient potential business volume, will never benefit from personalized advice from a professional?
In the background, there is a widely held bias that suggests human assistance in complex processes is always the cure-all, forgetting that it may not always be available when an opportunity arises. This could be due to technical or economic impossibility of providing quality service to everyone or because of the unbridgeable distance (either temporal or mental) between the advisor and the customer's experiences. Conversely, these are strong arguments in favor of embedded insurance for all products.
